PhRMA finds flaws in NICHM drug cost study, unveils rebuttal research

PhRMA finds flaws in NICHM drug cost study, unveils rebuttal
research

WASHINGTON, D.C. -- The Pharmaceutical Research and
Manufacturers of America (pHRMA) says it has "unmasked" in a new
study by the National Institute of Health Care Management (NIHCM)
significant errors which taint the Blue Cross/Blue Shield front
group's claims about pharmaceutical innovation.

"The NIHCM study, which was riddled with errors but was widely
reported as presented, is pure baloney," said Richard Smith,
PhRMA's Vice President of Policy and Research. "A study on
innovation that ignores major breakthrough treatments like
Herceptin for breast cancer, Enbrel for rheumatoid arthritis, and
Activase (t-PA) for strokes is deceptive, dishonest, and not in the
best interests of patients.

"Today, we are exposing this deception, and are calling on the
media to more closely scrutinize future 'pronouncements' by NIHCM."
[Eleven of NICHM's twelve board members are CEOs of Blue Cross/Blue
Shield insurance companies.]

The following are among many defects Smith identified in the May
28 NICHM study presentation:

The report noted, in a minor footnote, that more than half of
the 133 biotech medicines now on the market were approved during
the past five years -- but the study excluded all biotech drugs and
vaccines. That exclusion eliminated breakthrough drugs for breast
cancer, rheumatoid arthritis, and many other diseases, thus
rendering the study, on this basis alone, incomplete, inaccurate,
and misleading.

The report is based on the number of medicines accorded
'priority' as opposed to 'standard' classification by the FDA,
suggesting that only the former drugs represent true innovation --
a distortion of the FDA's classification system. As the FDA has
noted: "It (priority classification) is not intended to predict a
drug's ultimate value or its eventual place in the market".

The report implies that there is no meaningful clinical value
to so-called 'me-too' drugs. One of the most important reasons for
having multiple drugs within a therapeutic class is that, for many
drugs and particularly those for diseases of the central nervous
system, overall response rates are 50 percent or less. The more
drugs that are available, the more likely there will be one
suitable to meet the needs of particular patients. In addition, new
drugs in a class, or new formulations of existing drugs, are
frequently priced lower than older drugs and often provide new
cost-effective uses, or more efficient treatment for patients.

Smith also attacked the insurance industry's 'frequent refrain'
that their premium increases are due to drug spending. He said that
analysis of many studies looking at health care premium increases
showed that drug spending is a fraction of health care cost
spending. [PhRMA's] new research shows that spending on
prescription drugs, medical devices, and medical advances combined
accounted for 22 percent of the total increase in health-care
premiums between 2001 and 2002.

"With other health-care services, including hospitalization,
surgery, and doctors' visits, accounting for nearly four-fifths of
the premium increases, the insurers are unfairly shifting the
blame," Smith said. "Blue Cross and Blue Shield Plans that fund
NIHCM need to be honest with their customers about their rate
hikes. Until their campaign of deception ends, we will continue to
educate consumers and the media about NIHCM's factually flawed
approach."

PhRMA says the studies also show that most of the increase in
spending on prescription drugs is due to increased use, not
increased prices. Spending on prescription drugs represents about 9
percent of total health-care spending, compared to 32 percent for
hospital care and 22 percent for physician services.

"Moreover, there is growing evidence that increased spending on
medicines, especially newer, more advanced therapies, saves money
on other, more expensive treatments such as hospitalization,
thereby reducing system-wide health care costs," said Smith.

PhRMA represents the country's leading research-based
pharmaceutical and biotechnology companies. For copies of the PhRMA
study rebutting NIHCM's claims, and presenting the new analysis of
insurance premium increases, go to www.phrma.org.

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